Global Courant
Traders work during the closing bell on the New York Stock Exchange (NYSE) on March 17, 2020 on Wall Street in New York City.
John Eisele | AFP | Getty Images
Shares fell on Thursday after better-than-expected jobs data heightened investor concerns about the state of the economy and interest rate developments.
The Dow Jones Industrial Average fell 411 points, or 1.2%. The S&P 500 lost 0.9%, while the Nasdaq composite down 1%. The Dow and S&P 500 are on track to post their worst daily performance since March and May respectively.
Private sector jobs increased by 497,000 in June, according to data from payroll processing company ADP, the biggest monthly gain since July 2022. The June increase was more than double the Dow Jones consensus estimate of 220,000 won and much better than the downwardly revised 267,000 job addition seen in May. Two-year US Treasury yields hit a 16-year high during Thursday’s session.
The ADP data, which is often unreliable and considered more volatile than other employment data, comes ahead of Friday’s official June payroll report. Economists expect nonfarm jobs added 240,000 last month, a slowdown from the 339,000 jobs added in May, Dow Jones said.
However, traders can now expect a higher figure leading the Fed to resume its hiking campaign this month after a pause at its June meeting. Traders are counting about a 95% chance of a hike at the central bank meeting later this month, according to CME Group’s FedWatch tool.
“Clearly the market would have preferred an in-line number,” said John Lynch, chief investment officer at Comerica Wealth Management. “But because it was more than double expectations, that really raises the fear factor that the Fed should be more aggressive.”
On the other hand, job vacancies fell more than expected in May, according to a Labor Department report. That data may give hope that the tight labor market is at least loosening up.
JetBlue Airways fell more than 5% after the company announced it would end its partnership in the northeastern US US airlines to focus on Spirit airlines. US equities fell more than 2%, while Spirit rose slightly.
The shortened trading week resumed for a losing session on Wednesday after a break for the Fourth of July holiday. Wall Street flipped through the minutes of the Federal Reserve’s policy meeting in June, which showed most officials would support further hikes.
— CNBC’s Jeff Cox contributed reporting
